Australia's Howard revises Clean Energy Target

24 September 2007

Australian Prime Minister John Howard has announced a tripling of the country's Clean Energy Target, to about 15% of total energy supplies, by 2020.

Responding to populist sentiment before a November federal election, Howard has done a political backflip and announced a tripling of the low-carbon electricity supply target. Currently this forces retailers to source a proportion of their power from renewable sources or pay a penalty. The new policy will broaden the technology options to include nuclear power and carbon capture & storage (CCS).

Mr Howard said that his new initiative was "to gather up all of the different state schemes, many of which are contradictory or at the very least dissimilar." He added, "What in essence we want is to consolidate all of the states' schemes into a single national scheme. This will reduce costs for business, and ultimately for households."

The present Mandated Renewable Energy Target (MRET) of 9500 GWh per year becomes 30,000 GWh per year from low-emission sources by 2020, expected to account for about 12-15% of the nation's power then. In 2004, the government had rejected calls to double the MRET, saying that the likely cost of A$5 billion ($4.3 billion) was unjustified. The new plan is expected to cost A$7.5 billion ($6.5 billion) on a discounted basis, or A$1 billion ($0.9 billion) per year in crude terms (if allowances sell for 3.3 Ac/kWh (0.29 USc/kWh)).

Today only designated renewable technologies are eligible, but the new target will allow any technology producing less than 200g of greenhouse gases per kWh to qualify. Hence clean coal technologies might make it, as would nuclear - though the government dismissed suggestions that there would be any nuclear power on line by 2020.

The Business Council of Australia urged the government to focus on implementing an effective emissions trading scheme, rather than relying on targets. The New South Wales government's recent Owen report on electricity supply rationalization had made the point that unless there was a clear carbon emission price, investment decisions would not be made.